Lacking leadership, U.S. financial regulators could be in slo-mo for a while

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By Lisa Lambert

<span class="articleLocation”>Wall Street firms waiting for President Donald
Trump to usher in a new era of deregulation may have to wait a
significant while longer. The agencies expected to unwind
financial rules are so strapped for leadership they may not be
able to get much done until they staff up.

Nearly every major financial regulator currently has
significant leadership gaps, in part because the
Republican-dominated U.S. Senate has been reluctant to approve
nominations that were made by former President Barack Obama, a

Those openings could give Trump, a Republican, opportunities
to rewrite regulations for banks, securities traders, brokers,
and others. But it also could slow any attempts to overhaul Wall
Street oversight that have to work their way through agencies
that may be deadlocked or thinly staffed. The recently
inaugurated president has frozen all regulation-writing in
agencies that report to him but that does not apply to
independent agencies, forcing him to work with them on some
major rule changes.

Here is a look at the holes at the regulators charged with
protecting investors, keeping markets stable and driving away


The country’s top securities regulator typically has five
members (four commissioners and a chair) and by statute can
never have more than three members from the same political

The chair is currently empty but President Trump has
nominated Republican Jay Clayton.

It currently has only two commissioners, a Republican and a
Democrat who rarely agree. Even after Clayton is confirmed and
in place, he is expected to have to recuse himself from several
key decisions because of his previous work with Sullivan &
Cromwell, where he represented banks such as UBS (UBSG.S) and
Fifth Third Bank (FITB.O) in SEC cases. That would leave the two
deadlocked commissioners to continue voting against each other,
until more members are nominated.

Trump is required by law to nominate at least one Democrat.

There also are several key openings throughout the SEC,
including enforcement, corporate finance, economic and risk
analysis and trading and markets. Although career bureaucrats
are filling in as “acting” officials, they are unlikely to push
through significant rulemaking or enforcement actions without a
filled-out commission.


The CFTC, which regulates commodities and derivatives
trading, also typically has five members (four commissioners and
a chair), with no more than three members from the same party.

Acting Chair J. Christopher Giancarlo, a Republican, is
expected to be made the permanent head but Trump has not
announced a nomination yet.

Only one other commissioner, a Democrat, remains.

Obama had nominated a Democrat and a Republican for the
commission openings. Both had won praise from the Senate though
neither was confirmed. Before he left office, Obama renewed the


The position of a vice chair for supervision to oversee
banks was created through the 2010 Dodd-Frank Wall Street Reform
law but has never been filled. Sources say David Nason, a
General Electric executive and former Treasury Department
official, is the front-runner.


The Treasury secretary leads this council, which is made up
of all the heads of the major agencies and works to reduce risk
to the financial system by designating banks as “too big to
fail” and initiating regulation through its member agencies.
Trump has nominated billionaire Steve Mnuchin for secretary and
the former Goldman Sachs executive has said he will begin
revising the Volcker Rule on proprietary trading through his
position on FSOC. But until he is in place, there
is nobody at the top to even call FSOC meetings or engineer any
regulatory or deregulatory moves across agencies.


As the top supervisor for federal credit unions and insurer
of most state-chartered ones, this smaller regulator governed by
a three-member board signs off on all new major banking rules.

Currently, a Democrat chairs a board that only has one other
member, a Republican. The pair’s deadlock is being blamed for
the stalling of a multi-agency rule on executive compensation.


U.S. Comptroller Thomas Curry’s term expires in April but
the banking regulator by law can stay on until his successor is
confirmed. Trump could potentially re-appoint him but that is

The term of the director of the Consumer Financial
Protection Bureau, Richard Cordray, does not expire until next
year. Republicans are pushing Trump to fire Cordray sooner and
replace him either with a commission or a conservative who would
start pulling back the watchdog’s reach. The debate over whether
the president has the power to fire the CFPB director is
currently at the heart of a lawsuit that is being appealed.

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